Jury finds Vonage violated Sprint’s patents

A federal jury in New York has found that VoIP provider Vonage has violated …

VoIP service provider Vonage took another hit from the federal court system today. A federal jury has concluded that the company has been in violation of seven patents held by wireless phone carrier Sprint Nextel. This follows on the heels of a similar jury verdict against Vonage in March; in that case, Verizon successfully sued for damages due to patent violations.

The financial burden of this ruling could be dramatic. Sprint Nextel was awarded $69.5 million in damages—as of today, that represents over a third of Vonage's entire market capitalization. But the bad news doesn't end there, as Sprint was also awarded a five percent royalty on all future Vonage revenues. That will undoubtedly be painful for a company that has lost money throughout its existence, and currently only has enough cash on hand to go for about a year at its current loss rate.

As expected, Vonage's chief legal officer was displeased with the verdict. "We are disappointed," said Sharon O'Leary, "that the jury did not recognize that our technology differs from that of Sprint's patents." She vowed to appeal and noted that "Vonage has already demonstrated that it can keep its focus on customers and on its core business while managing ongoing litigation." That demonstration came by way of a successful motion in the patent fight with Verizon, which allowed Vonage to continue to sign up new customers as the appeal process in that case winds forward.

The Verizon patent fight may provide a template for what will happen in this case. Ars' analysis of Verizon's patents suggests that they are less about technology or implementations, and more about general concepts necessary for telephony. As such, they might need reevaluation in light of the Supreme Court's recently-revised standard for obvious patents. Vonage has been allowed to argue that the new standard applies to its case as part of its appeal of the Verizon verdict. Whether that succeeds may dictate Vonage's approach to the Sprint case, but decision on the Verizon appeal has not yet been rendered.